Agriculture and Natural Resources

Cow Herd Profitability

Denise Schwab, Beef Field Specialist, Southeast Area

Problem Statement:

Cow herd profitability is a challenge with the rising costs of feed, fuel, and other inputs. Estimating calf sale prices is also a challenge since the cow herd is downsizing, there is excess feedlot and packer capacity, a declining demand due to exports, the variability in exchange rates, and a weakening US economy.

Since producers can’t control the feeder calf market, they need to focus on those production aspects they can control in order to remain profitable. Cattlemen will need to use every tool available to control costs, minimize waste and increase productivity in order to make a profit from the cow herd in 2009.

Programmatic Response:

A series of workshops was held in December to discuss various tools cattlemen can use to control input costs and increase profitability. Controlling feed storage and feeding waste, determining least cost feeds and rations, and technologies to control other costs were discussed. Dr. John Lawrence, ISU Professor and Director of the Iowa Beef Center, also provided an updated cattle outlook.

Fifty producers attended the workshops held in DeWitt, Vinton, Marengo, Toledo, and Maquoketa.

As a follow up to the cow profitability workshops we held several computer workshops for cattlemen interested in building their own rations. Participants had the opportunity to develop several rations for their cow herd, determine if they meet the National Research Council standards, and evaluate the costs of their rations.

The workshops were held in DeWitt, Marengo, and Vinton, with 16 producers participating.

Clickers were used during the presentation to get participants involved and also to determine their interest in topics and their knowledge of production costs. While clickers are a great tool to get participants involved in the presentation, they only worked about half the time. Since they crashed my computer two of the five times used, it left me with too little data to truly analyze. However, here are the results from the three sessions that were not destroyed by the computer system.

Participants were asked to estimate their total production cost per cow, and 25% said $300-400, 58% said $400-500 and 17% said they were not sure. The 2005 SPA summary (the last year with enough data to summarize) showed the average financial cost per cow was $381. Based on the limited participants, the 2008 cost of production was $378 per cow for the top producers, so many of the ‘average’ producers should be at production costs well above $400. At the beginning of the meeting participants were asked if they separate cows into different feeding groups, and 70% said they did. They were asked again at the end of the meeting and 84% said they would separate cows into different feeding groups as a result of attending this workshop. Participants were asked to estimate how much forage they lost during storage and feeding. Before the program 48% said they lost 10% or less of their forage and after the program 23 % estimated their forage losses at 10% or less, while 77% estimated they lost 11% or more. At the end of the program participants were asked what economic impact this program would have on their winter feed costs. 37% said it would reduce their costs by $.10 per head per day and 11% said it would save them $.25 per head per day.

One of the teaching tools used in the profit meetings was a self assessment of their cow feeding program. Participants completed the assessment during the meeting, and then were asked to complete an objective form where they listed a farm objective related to cow feeding and to list the essential steps to complete those objectives. They were also to list who is responsible for each step and a deadline for when it was to be completed.

Of the 50 participants, 4 had no clear steps included on their goal sheet, however 19 had one or two clearly defined steps they planned to work on and another 19 had three or more clearly defined steps. Twenty-eight of the participants had goals for changes for the winter 08-09 feeding period, but 11 had no plans for change until the 09-10 feeding period. Seven participants followed up by attending the BRANDs ration balancing workshops in January to modify their cow rations.

One of the participants works for FSA and planned to share resources from the cow profits meeting with his clients who had cow herds. Four of the participants tested forages and requested additional help in ration balancing. Two of the participants from the BRANDs workshop requested additional help in ration balancing.

Follow up calls are being made to determine the extent of their follow through on the goals they identified and to measure changes to the operation as a result of participating.